By: AKRAM KHATOO
Entrepreneurial success relating to any kind of business depends on spectrum of various factors like sustained market environment, availability of start-up capital and ensured financing from financial institutions for working capital, development finance in case of need and most importantly business know-how including entrepreneurial, technical skills and also networking for attaining wider market share both nationally and internationally.
For a woman venturing into business with a firm determination to excel, her access with regard to above said prerequisites of business is not easy due to patriarchal system having strong hold in majority of developing countries, preventing women in families to go into business according to their free will. It is evident from a recent survey report from Organisation for Economic Co-operation and Development on closing gender gaps, that globally only 30 percent of businesses are held by women.
World Bank’s recent survey report on African and Sub-Saharan countries reflects gender gaps in economic opportunities particularly relating to type of businesses women enter and generally pursue. In almost all low and middle-income developing economies including Pakistan, women were found engaged in informal sector doing small businesses or handling traditional businesses which have been a close preserve of women globally such as garment making, catering, fashion designer, boutiques and beauty parlours etc giving them lower returns and few have dared to undertake high-return activities.
Opportunities for entrepreneurship vary from country to country depending on level of economic development and overall status of education. Women entrepreneur in developing countries have diverse businesses according to country they inhibit, but education and training play an important role in improving overall business environment and creating business opportunities. However, this does not reflect opportunity for entrepreneurial activity than lack of opportunity for employment both in public and private sector. In almost all the developing countries women employees/wage earners were found to have higher education than those who were self-employed. Interestingly, according to the World Bank research study women in high income countries as wage earners are less educated than women employers.
Further general global perception is that businesses owned by women are less productive than their male counterparts in the same line of business. However, at the same time women’s general inclination towards smaller and traditional business firms signifies opportunities and potentials for women much more than gender-based disparities. But there is need to create more opportunities for low income developing countries women not only for enhancing their participation in economic activity, but also more importantly for bringing diversity in business undertaken to enable them to move to higher return activity.
Findings of research undertaken by National Foundation of Women Business Owners for Latin America and Caribbean reveals that entrepreneurial activities of women have correlation with GDP growth rate, which is far stronger than the relationship between the general participation of women in the labour force and the economic growth of a country. This identifies strategy of empowering women through development of entrepreneurship, which in turn has positive impact not only on economy of the country, but also prompts improvement of social, educational and health policies of the country concerned.
However, it is unfortunate that despite above said importance of full-fledged involvement of women in business for overall socio-economic growth of a country they continue to face quite a number of challenges while entering a business or expanding their existing project. Women find themselves in a disadvantaged position while expanding/scaling up business for arranging development financing. Dow Jones Venture source reveals that only 5 percent of venture capital funding goes to female CEOs. Secondly, women striving to scale up their businesses need to build business relationship across gender rather than relying on females in the same line of business, particularly in the context of marketing and availing funding from financial institutions.
Inaccessibility to market is yet another obstacle. In this regard spread of information and communication technology and networking can be helpful in getting easy access to customers and suppliers and up-to-date knowledge of pricing mechanism nationally and internationally. Business women also need to seek membership of various business associations, NGOs working for economic empowerment of women and trade-related bodies like chambers of commerce and industry as these entities are responsible for improving women business opportunities, providing and sharing of information and knowledge and for building partnership among key stakeholders to share business experiences at various counts and providing access to women to all governmental platforms for voicing in all policy decisions.
Similarly spread of mobile/branchless banking can take care of start up capital and also working capital needs. It can particularly be helpful for rural women who apart from working on family farms without any remuneration undertake various non-farming pursuits to enhance family income, but inaccessibility to institutional credit due to lack of assets ownership and absence of required infrastructure prevent her from expanding the business and be part of formal sector economic pursuits. Women in general are deprived of inheriting both movable and immovable property or if they happen to own assets, these cannot be offered as collaterals without the consent of male members of the family.
Other factors providing level playing field to women entrepreneurs are definitely businesswomen friendly regulatory requirements like business registration and licensing for formalising small firms.
Christine Lagarde – Managing Director of IMF, while giving her views for ‘Straight Talk’ column of an IMF publication stated that women’s share enhancement in employment and self-employment could boost economic growth rate of developing nations. She also believes based on her global experience that corporate sector is benefited a lot by taking more women on board of directors. Such companies could gain higher returns on equity through significant improvement in sales. She also advocated the cause of women entrepreneurs in view of their commanding 2/3rd of global discretionary spending that is by enhancing their propensity to spend they would be next emerging market for consumer products of both male and female entrepreneurs.
In fact businesswomen bring ripple effect by investing in future generation. It particularly holds good for developing countries where rate of literacy and gender gaps relating to education could improve due to businesswomen initiatives to send their children to schools despite overall household economic constraints thus adding to human capital of their country. Keeping in view these facts, the IMF as a policy matter, implores member countries particularly developing nations to formulate gender-smart fiscal policies reflecting how taxes and government spending affect gender equality and opportunities for women as it is the practice in majority of developed and developing countries that higher tax rate is applied for second earner of the family, which usually is woman as wife or daughter etc. This reduces the incentive for women to work.
Secondly, the IMF Chief urged the nations that in view of a very significant demographic transition occurring and causing sizable increase in number of aging population and expected decline in number of working age population it is imperative for all nations to deploy almost half of the global population remaining under utilised. Hence, equal opportunities to be ensured for women to get their due representation among employed and self-employed population.
For greater engagement of women in business, there is need to create congenial business environment. Policymakers at government level need to address women issues in the context of doing business particularly taxation, marketing and licensing of business etc, which will ultimately have favourable repercussions on business sector and economy as a whole.